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Help to Buy completions fall 41 per cent in Q1 as scheme closes

  • 18/07/2023
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Help to Buy completions fall 41 per cent in Q1 as scheme closes
Some 3,202 properties were purchased using a Help to Buy loan in the three months to 31 March, a 41 per cent drop compared to the same period last year.

The latest government figures show that the loans used to buy homes under the scheme had a total value of £355m and this supported the purchase of properties worth £1.15bn collectively. 

Applications for the Help to Buy scheme closed on 31 October last year and transactions had a completion deadline of 31 March. Housebuilders could apply for a legal completion up to the 31 May. 

The final phase of the scheme launched in April 2021 was restricted to first-time buyers only and new regional price caps were introduced. 

This resulted in a reduction in completions across all regions in England except for London, where this rose by three per cent in Q2 2021. 

In Q1 this year, completions were still down in all regions except for London where levels rose by 15 per cent annually. The government said this may be due to the unchanged £600,000 price cap for the capital. 

The greatest fall in completions was recorded in the North East, North West and West Midlands, where this reduced by 72 per cent compared to last year. In the South East, completions dropped by 47 per cent annually. 


Buyer profiles 

The Department for Levelling Up, Housing and Communities (DLUHC) figures showed that the average price of a property purchased through the scheme dropped when the regional price caps were brought in.

The largest decline was seen in the North East where the average price fell by 23 per cent over Q1 2021 to Q1 2023, from a value of £231,765 to £168,252. 

In the capital, the average property value fell from £454,017 in Q1 2021 to £443,940 in Q1 2023. 

Across all regions, the average price of a property purchased with Help to Buy in Q1 2021 was £311,096. 

The differences in average price between 2023 and 2022 were less pronounced while increases were recorded in the East of England and East Midlands. 

Overall, the average property bought through the scheme had a value of £359,235 in Q1 2023, up from £320,097 last year. 

The median household income of applicants was lower in all regions except London and the East of England when comparing Q1 2021 to Q1 2023. In these two regions, the median household income fell by five per cent and one per cent to £69,000 and £62,973 respectively. 

Compared to this year, the overall median income rose from £58,028 in Q1 2021 to £60,095 in Q1 2023. 

In Q1 2022, the median household income was £53,750. 

DLUHC said the change in average deposit sizes was “mixed” when compared to Q1 2021 as this fell in the North East, Yorkshire and the Humber and the East Midlands, stayed the same in the North West, West Midlands and the South West, and increased by one per cent in London, the South East and the East of England. 

The most notable change was seen in the East Midlands, where the average deposit dropped from £25,846 in Q1 2021 to £16,339 this year. Compared to the same period in 2022, this was relatively similar to the average of £16,706. 

Under the new phase of the scheme, 35 per cent of homes purchased were flats, compared to a share of 18 per cent previously. 


‘Going out with a whimper’ 

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Help to Buy is going out with a whimper, as the schemes fail to deliver for first-time buyers. The government needs to protect the Lifetime ISA from the same fate. 

“It was officially the final month for completions using the Help to Buy equity loan – although some will be pushed as far as May.” 

She added: “The limit on the property value is a major sticking point. Outside London, you can only buy a property worth up to £250,000 with a Help to Buy ISA, and the average first-time property is bumping up against the limit.” 

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